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Four hackers charged with stealing $100m in US army and Xbox technology

Four men have been charged with breaking into the computer systems of Microsoft, the US army and leading games manufacturers, as part of an alleged international hacking ring that netted more than $100m in intellectual property, the US Department of Justice said on Tuesday.

The four, aged between 18 and 28, are alleged to have stolen Xbox technology, Apache helicopter training software and pre-release copies of games such as Call of Duty: Modern Warfare 3, according to an unsealed indictment. Two of the hackers pleaded guilty earlier on Tuesday, the DoJ said.

“These were extremely sophisticated hackers…. Don’t be fooled by their ages,” assistant US attorney Ed McAndrew said after a court hearing on Tuesday.

According to prosecutors, the defendants stole more than $100m worth of intellectual property and other proprietary data related to the Xbox One gaming console and Xbox Live online gaming system, and pre-release copies of popular video games.

David Pokora, 22, of Mississauga, Ontario, and Sanadodeh Nesheiwat, 28, of Washington, New Jersey, each pleaded guilty to a single count of conspiracy to commit computer fraud and copyright infringement. They face up to five years in prison when sentenced in January.

Prosecutors said the two men were part of a small group of gaming enthusiasts that called itself the Xbox Underground.

An 18-count indictment that was returned by a grand jury in April and unsealed Tuesday also charges Nathan Leroux, 20, of Maryland, and Austin Alcala, 18, of Indiana, with participating in the conspiracy. An Australian national whose name was not released also has been charged, and authorities, who are continuing their investigation, say roughly half a dozen other individuals may be involved.

Once inside the companies’ computer networks, the conspirators accessed and stole unreleased software, software source code, trade secrets, copyrighted and prerelease works, and other information, authorities said. They also stole financial and other sensitive information relating to the companies, but not their customers, McAndrew told U.S. District Court Judge Gregory Sleet.

Prosecutors said the ring’s exploits included manufacturing and selling a counterfeit Xbox One gaming console before the unit’s official release and gaining access to a US army computer system for two months in late 2012 through their hacking of Zombie Studios, a Seattle-based video game company that was working with the army on flight simulation software to train Apache helicopter pilots.

McAndrew said FBI officials in Delaware were alerted to the hacking operation in January 2011 by a confidential informant, and that the gaming companies cooperated in the investigation.

Authorities began obtaining arrest warrants last year, and Pokora, who McAndrew said was looked to by other group members as a leader, was taken into custody in March at a border crossing in Lewiston, New York.

Pokora’s plea is believed to be the first conviction of a foreign-based individual for hacking into U.S. businesses to steal trade secret information, authorities said.